Category: Insights

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

• On average, EV/Revenue and EV/EBITDA multiples fell 16% across all categories. Europe and UK were impacted more severely, with an average 22% decrease compared to an average 11% decrease between the US categories.
• This widespread decline can be attributed to the uncertainty brought about by factors including: the ongoing pandemic, particularly the impact of city-wide lockdowns in China; geopolitical tensions, notably the war between Russia and Ukraine; and significant inflation that was already rising due to supply chain and recruitment issues across developed economies.
• Unsurprisingly, the market is valuing profitability over growth at this time: EV/Revenue multiples have decreased significantly more than EV/EBITDA multiples, both quarter-on-quarter and year-on-year.
• The DeepTech and Industrial sectors are the most volatile of all the sectors covered in the report. On the one hand, they showed the largest (positive) year-on-year EV/Revenue growth, but on the other hand, they also experienced the biggest declines in quarter-on-quarter EV/EBITDA index.

Silverpeak has updated its research into Series B & C round in European Tech Companies.

Key takeaways:

• Series B&C investment in European tech companies rockets with total capital invested in 2021 increasing 2.5x to €25.3bn
• European mega-rounds (€100m+) are becoming very common. Of the 2021 total of 58, this was 42 Series C and 16 Series B rounds
• Median deal sizes have nearly doubled YoY: C rounds grew 89% to €78.4m and B rounds grew 68% to €29.9m
• UK companies continue to attract the biggest share of investment into European B&C rounds – 32% by value and 35% by count
• Food & Delivery Tech and Fintech captured the largest investments in 2021, with 3 Series C and 2 Series B rounds, totalling €3.1bn

Paddy MccGwire, Managing Partner, commented that “2021 has been a watershed year with a step change in the value of Series B&C Technology sector investment. The pace and scale of private investment continues into 2022 despite reduction in Technology stock indices on public markets. ”

B&C Rounds Research Silverpeak

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

• Despite a year-end correction, European software multiples outperformed their US peers, growing at an impressive 47% YoY for Europe and 26.2% for UK Small & Mid.
• After a volatile Q4, the last quarter ended in only a small overall movement in revenue multiples across all categories, with the exception of UK Small & Mid which decreased 7.9% QoQ.
• There is no distinctive trend on EBITDA margins in Q4 – a small increase for both Europe and US Horizontal, and decreases for UK Small & Mid, US SaaS and US Vertical.
• The Enterprise Values Index increased modestly across 3 out of the 5 subsectors, led by Cybersecurity, and then HR tech and Industrial. Fintech charted the strongest decline this quarter, ending the year with a small plus of 3%. Every index declined in December.

Silverpeak Benchmark Report Q4_2021

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

• Although revenue multiples of US software companies continue to be higher than the rest, Small & Mid Cap UK and European companies have shown much greater Y.o.Y growth.
• There has been an overall increase in revenue multiples this quarter with the exception of US Vertical which reached a peak of 10.6x at the start of September and fell substantially by the end of Q3.
• EBITDA multiples for UK and European software companies continue to rapidly increase and outperform the US companies on Y.o.Y growth. European software multiples increased by 11% Q.o.Q reaching US Vertical levels for the first time since 2016.
• Even though HR tech continues to have a significantly higher median enterprise index value than the other verticals, the median EV has fallen by 5% in Q3.

Silverpeak Benchmark Report Q3_2021

Silverpeak has updated its research into Series B & C round in European Tech Companies.

Key takeaways:

• Series B & C investment in European tech companies sky-rockets with total capital invested in H1 2021 increasing 115% on H2 2020, Q3 2021 increasing 170% to €7.2bn, compared to Q3 2020
• Proportion of larger rounds continue to rise: the proportion of B rounds exceeding €20m increased to 65% and C rounds exceeding €50m increased to 62%
• The median value of C rounds has increased significantly to €82m, double H1 2020, due to a series of mega-rounds
• UK companies continue to receive the largest share of European investment  – 29% by value and 31% by number
• The largest C round investment in 2021 YTD was €810m, approximately 3x larger than the biggest C round in 2020
• Europe continues to generate outstanding tech companies, attracting 39 mega-rounds in excess of €100m to Q1 – Q3 2021

Paddy MccGwire, Managing Partner, commented that “The extraordinary step change in investment by number and value in 2021 is set to continue as fund ’dry powder’ is accompanied by a proliferation of new and existing players announcing fresh funds”

B&C Rounds Research Silverpeak

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

• Both revenue and EBITDA valuation multiples rise for nearly all US software categories in Q2 2021, recovering from the dip last quarter. In Europe and the UK, valuation metrics continue to rise, with the UK EBITDA multiples diverging away from European multiples, now 40% higher.
• Revenue multiples for US Vertical reach an all time high, diverging from US Horizontal by 27%.  US SaaS application software companies fail to recover to the highs reached at the end of 2020. In contrast, median revenue multiples for UK Small & Mid and European software companies have continued to increase and both reached all time highs in Q2 2021.
• EBITDA multiples rose in Q2 for every category except US vertical. Both UK Small & Mid and European software companies outperformed the US software companies both in terms of Q.o.Q. and Y.o.Y. growth, with the UK Small & Mid up 110% Y.o.Y. EBITDA margins and forecast annual revenue remained stable across most categories.
• The Enterprise Values Index rose across 3 of 5 the sub sectors with HR Tech, Fintech and Cybersecurity increasing in value.  HR Tech continues to outperform other verticals and records the largest increase of the quarter. Fintech shows its largest increase moving to its highest level since January 2019.

Silverpeak Benchmark Report Q2 2021

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

• Both revenue and EBITDA valuation multiples fell for nearly all US software categories in Q1 2021, stalling the strong recovery and advance shown in the second half of 2020. In Europe and the UK, valuation metrics continue to increase, the exception being European EBITDA multiples which have fallen 18%.
• Revenue multiples for US Vertical, Horizontal and SaaS application software companies have all fallen in Q1 but remain at or above pre- pandemic highs. In contrast, median revenue multiples for UK Small & Mid and European software companies have continued to increase and are now both above pre-COVID levels for the first time.
• EBITDA multiples fell significantly in the middle of Q1 for US companies. US Horizontal recovered by the end of March for a median multiple of 40x, now well above SaaS and Vertical multiples of 29x and 26x.EBITDA margins remained stable across most categories, whereas forecast annual revenue growth increased significantly for all.
• In the Enterprise Value Index, all sub sectors increased or remained constant from Q4’20.However, towards the end of the quarter four of the five verticals showed a downward move, with FinTech as the only exception.HR Tech continues to outperform other sub sectors, although it showed the largest fall of any vertical from February to March.

Silverpeak Benchmark Report Q1 2021

Silverpeak has updated its research into Series B & C round in European Tech Companies.

Key takeaways:

• Series B&C VC investment in European tech companies reaches a new high in 2020 with investment totalling €4.5B, an increase of 37%
• General trend towards larger rounds, with a tripling to 15% of B rounds above €50m and 40% of C rounds above €50m
• The UK still dominates as the destination of capital, and grew 42% in 2020 vs 2019
• The Nordic region shows a strong presence in B rounds with the region recording a 120% increase in capital invested on a 20% increase in deal count compared to 2019
• The largest B rounds were dominated by companies from the UK, producing 6 out of the top 10 largest rounds in 2020
• H2 2020 had 4 out of the 10 largest C rounds since 2016

Paddy MccGwire, Managing Partner, commented that “The European capital market for private companies has never been so strong, with a 37% surge of B &C round capital invested in 2020.”

Silverpeak – B&C Rounds Research April 2021

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

 Report highlights

• Both revenue & EBITDA multiples have continued to bounce back significantly. All categories now record both revenue and EBITDA multiples which exceed the 24- month average, with 6 of the 10 multiples reaching record levels.

• US application software median revenue multiples continue to chart new all-time highs in Q4’20. US Horizontal recorded the lowest growth in revenue multiple across all categories of 10.5%. For the first time since mid-2018, US Horizontal revenue multiples are now lower than US Vertical multiples, despite recording the largest increase in its forecast annual revenue growth from 7% to 11%.

• EBITDA multiples for the US Horizontal, Europe and UK Small & Mid have reached the highest levels on record. US SaaS and US Vertical EBITDA multiples recover strongly, though remain below their peak. However, the median EBITDA margin has not changed significantly in Q4 for any categories.

• HR Tech continues to outperform other sub sectors in our Enterprise Value index, despite signs of downward trend at the start of the quarter. The 5 subsectors all increased at varying levels across the quarter, finishing at high points with the exception of FinTech which is still below its January 2019 level.

If you would like to discuss this report further please contact:

 Paddy MccGwire
pm@silverpeakib.com

Silverpeak Benchmark Report Q4 2020